NOTICE IN RESPECT OF THE RIGHT TO REQUEST REDEMPTION OF SHARES OF PJSC “MEGAFON”

Public Joint Stock Company “MegaFon” (the “Company” or “MegaFon”) announced on July 27, 2016, that on July 26, 2016 the Board of Directors (the “Board”) of the Company convened the Company’s Extraordinary General Meeting of Shareholders (“EGM”) to be held on September 16, 2016 via absentee voting. The proposed EGM agenda contains, among other things, the following items:

to be transferred pursuant to a Transfer Act to FTC, which will be a wholly-owned subsidiary of the Company.

Accordingly, in the Spin-off there will be no change in shareholders’ interests in the assets and liabilities being transferred to the new company, other than that those assets and liabilities will be indirectly, rather than directly, held by the Company. The amount of property and liabilities to be transferred to FTC in the Spin-off will not exceed 10% of the book value of MegaFon’s assets as of June 30, 20161.

A merger of the Company, which will be the surviving entity, with Mobicom Volga and Yaroslavl-GSM to be executed in accordance with the Merger Agreement, pursuant to which:

All property, privileges and claims owned by Mobicom Volga and Yaroslavl-GSM, including resolutions on provision of radio spectrum, permissions for the use of radio frequencies, numbering resources, and licences will be transferred to the Company at their book value under the principle of universal legal succession and pursuant to the Transfer Act of Mobicom Volga and Yaroslavl-GSM;

the Company will assume the rights and liabilities of Mobicom Volga and Yaroslavl-GSM, unless such rights and liabilities are terminated on the basis that the debtor and the creditor become the same party as provided under Russian law currently in effect;

All liabilities of Mobicom Volga and Yaroslavl-GSM will be transferred to the Company under the principle of universal legal succession.

As a result of the Merger, the shares of Mobicom Volga and Yaroslavl-GSM will be cancelled and will not be subject to conversion into MegaFon’s shares.

Materials on the proposed Reorganizations, and other materials related to the EGM will, in accordance with applicable legal requirements be made available, on or before August 16, 2016, to shareholders of record as of the approved record date for the EGM, which is August 15, 2016 (the “Record Date”) and posted at: http://corp.megafon.com/investors/stock_and_capital/reorganization.

Pursuant to Article 75 of the Russian Federal Law on Joint Stock Companies, the Company’s shareholders who vote against approval of any of the Reorganizations or of the Lease Agreements, or do not participate in voting on any of these items, will have the right to request full or partial redemption by the Company of their ordinary shares, subject to applicable Russian law. Only shareholders who held the Company’s shares as at the Record Date and voted against approval of any of the Reorganizations or of the Lease Agreements or did not participate in voting on any of these items at the EGM will be entitled to request that their shares be redeemed, subject to the Statutory Limit (as defined below).

The Company may not spend more than 10% of its net assets as of the date of the EGM (calculated in accordance with Russian accounting standards) to redeem the Company’s shares (the “Statutory Limit”). Therefore, there are limits on the number of shares that the Company can redeem. In the event that shareholders request the redemption of more shares than the Company is permitted to redeem, shares submitted for redemption will be redeemed on a pro rata basis. A shareholder may not tender for redemption ordinary shares in excess of the number of ordinary shares that such shareholder held as at the Record Date.

The redemption price will be 557 Russian rubles per ordinary share. The Board of Directors set the redemption price taking into account the valuation of the market value of one ordinary share of the Company prepared by Deloitte and Touche CIS ZAO, an independent appraiser. The conclusion of Deloitte and Touche CIS ZAO as to the valuation of the market value of the Company’s shares will be posted at: http://corp.megafon.com/investors/stock_and_capital/reorganization. All payments due for redeemed shares will be made in Russian rubles.

In accordance with Russian law, shareholders will have the right to request the redemption of their shares or withdraw their request for share redemption within 45 calendar days from the date of the EGM (i.e. until October 31, 2016). Withdrawal requests may only be filed in respect of all, but not part, of the shares which have been tendered for redemption by an eligible shareholder.

Requests for redemption and withdrawals of requests for redemption of the Company’s shares recorded with the Company’s share register will be required to be delivered to the Company’s share registrar, Joint Stock Company “Independent Registrar Company” (the “Share Registrar”), at: Ul. Ivana Franko, 8, Moscow, Russian Federation, 121108 by October 31, 2016. Forms of requests for redemption, and withdrawals of requests for redemption, of the Company’s shares recorded with the Company’s share register, along with the instructions for completing such requests, will be made available on or before August 16, 2016 at http://corp.megafon.com/investors/stock_and_capital/reorganization.

Requests for redemption and withdrawals of requests for redemption of the Company’s shares recorded with the institutions having the right to record the rights attached to the Company’s shares (as defined under Russian law), including relevant Russian depositaries, must be delivered to the addresses of such relevant institutions sufficiently in advance for the relevant institution to be able to deliver such request to the Share Registrar by October 31, 2016. Forms of requests (instructions) for redemption, and withdrawals of requests for redemption of the Company’s shares recorded with such institutions, along with the instructions for completion of such requests (instructions) can be obtained from such relevant institutions.

Once a request for redemption has been received by the Share Registrar or the Russian depositary (nominee holder), as applicable, the Company’s shares for which the request for redemption has been filed will be blocked by the Share Registrar or the Russian depositary (nominee holder), as applicable, and the shareholder requesting redemption will not be able to dispose of, transfer, pledge or otherwise encumber such shares, unless a withdrawal of the request for redemption has been submitted by the relevant shareholder to the Share Registrar or the Russian depositary (nominee holder), as applicable, within 45 calendar days following the EGM (i.e. by October 31, 2016).

Requests for redemption and withdrawals of such requests will be considered submitted to the Company on the day of their receipt by the Share Registrar either directly from shareholders or through relevant Russian depositaries (nominee holders). Please note that on October 31, 2016 the Share Registrar is open for business until 6 p.m. Moscow time.

Under Russian law, the Company will be required to purchase the shares tendered for redemption, subject to the Statutory Limit, within 30 calendar days from the last date when submission of requests for redemption can be made, i.e. by November 30, 2016. All shares accepted for redemption are expected to be transferred to the Company upon completion of payment for the shares tendered for redemption.

Further details in respect of the redemption procedure will be set forth in the notice on convening the EGM, which will be published on or about August 16, 2016.

GDR holders will be able to request redemption of the ordinary shares represented by their GDRs only if they (i) surrender and cancel all or part of their GDRs representing the number of ordinary shares they wish to have redeemed and take delivery of the relevant number of the ordinary shares represented by the GDRs by the close of trading on the Record Date and (ii) vote against approval of any of the Reorganizations or the Lease Agreements or do not participate in voting any of these items at the EGM. Surrender of the GDRs is subject to the payment of relevant fees to The Bank of New York Mellon (the “GDR Depositary”) and other provisions of the Deposit Agreement between the GDR Depositary and the Company, dated August 24, 2012, as amended by supplemental agreements dated June 2, 2014 and May 28, 2015 (the “Deposit Agreement”).

The terms and conditions governing the share redemption, including the form of payment, timing, Statutory Limit and other requirements set forth above, will also apply to GDR holders who surrender their GDRs and receive ordinary shares as provided in the preceding paragraph.

GDR holders should note that the delivery of the Company’s ordinary shares represented by the GDRs upon the surrender and cancellation of the GDRs may take at least 10 Russian business days. This period does not include the time necessary for the opening of a securities account for the receipt of the ordinary shares represented by the GDRs. GDR holders may also need to open a Russian ruble account with an authorized Russian bank for the receipt of payments for the ordinary shares accepted for redemption.

Neither GDRs nor any other financial instruments, other than the Company’s ordinary shares, will be accepted for redemption.

GDR holders wishing to request redemption of the ordinary shares represented by the GDRs held by them are advised to notify their broker immediately of the deadline by which they need to receive the ordinary shares represented by the GDRs and inform them of the instructions set forth below. Once the broker submits the GDR cancellation instruction, the broker can contact drsettlements@bnymellon.com or +353-1-900-3466 / +1 212-815-2231 for status updates. The specific steps to be followed by GDR holders and/or their brokers are as follows:

For Rule 144A GDRs:

Deliver the GDRs via The Depository Trust Company (“DTC”) to the GDR Depositary, DTC account 2504. Indicate in the comment field, “See fax Instructions” OR “See email instructions”. The GDR Depositary will then charge a fee of $0.05 per GDR fee (rounded up to
the nearest 100 GDRs) and other applicable fees.

Create delivery instructions on company letterhead for fax submissions or send from a group email address where at least one other person is copied on the email and include the following information:

Security Name

CUSIP Number

Settlement Date

Number of GDRs

Institution where the ordinary shares will be delivered to in the local market (name and BIC of bank, beneficiary name and beneficiary account number).

After the GDR Depositary receives the GDRs, valid instructions and payment of applicable fees, it will instruct its custodian (i.e. Sberbank of Russia) to deliver the ordinary shares. GDR holders should ensure that the custodian is set up to accept delivery of the ordinary shares.

Process a type 40 instruction in Euroclear Bank SA/NV (“Euroclear”) or an instruction to Clearstream Banking, société anonyme (“Clearstream”). GDR holders or their brokers may contact the Euroclear Customer Service Team at +32-2-326-2098 or the Clearstream Settlement Team at +35-2-2-433-6591 for further assistance. The instruction must include the following information:

Security Name

CUSIP Number

Settlement Date

Number of GDRs

Institution where the ordinary shares will be delivered to in the local market (name and BIC of bank, beneficiary name and beneficiary account number).

After the GDR Depositary receives a valid swift instruction from Euroclear or Clearstream, the GDR Depositary will bill Euroclear/Clearstream $0.05 per GDR fee (rounded up to the nearest 100 GDRs) and other applicable fees.

After the GDR Depositary receives the GDRs, valid instructions and payment of applicable fees, it will instruct its custodian (i.e. Sberbank of Russia) to deliver the ordinary shares. GDR holders should ensure that the custodian is set up to accept delivery of the ordinary shares.

Any further clarification related to the cancellation of the GDRs can be obtained from: Mark Lewis, mark.lewis@bnymellon.com, telephone +44 207 163 7407.

All steps required for the cancellation of GDRs and the receipt of ordinary shares represented by the GDRs must be completed so that the ordinary shares are delivered to the GDR holder’s ordinary shares securities account by the close of trading on the Record Date.

If a holder wishes to re-deposit ordinary shares into the GDR facility, such deposit would require payment of issuance fees to the GDR Depositary. Furthermore, a holder may not be able to re-deposit its ordinary shares into the GDR program if the GDR program has reached its limit or is otherwise closed for deposits.

GDR holders whose ordinary shares will be recorded with the securities accounts opened with Russian depositaries are urged to consult the relevant Russian depositary on the specific procedures, deadlines, cut off times, fees and expenses and documentation required, necessary or desirable for the share redemption, filing of share redemption or withdrawal requests and/or receipt of payments for the shares accepted for redemption.

GDR holders should be aware that they may have tax liabilities in Russia and other applicable jurisdictions in connection with the surrender and cancellation of the GDRs and taking delivery of the Company’s ordinary shares represented by the GDRs and in respect of the proceeds received in connection with the redemption of the Company’s ordinary shares. GDR holders are urged to consult their
tax advisers at their own expense in respect of any potential tax consequences in connection with the foregoing.

If you are in any doubt as to what action you should take, you should immediately seek your own independent financial, tax and legal advice from your stockbroker, bank manager, legal advisor, accountant or other independent financial adviser.

Some of the information in this document may contain or refer to projections or other forward-looking statements regarding future events or the future financial performance of the Company. You can identify forward looking statements by terms such as “expect”, “believe”, “anticipate”, “estimate”, “forecast”, “intend”, “will”, “could”, “may”, or “might” the negative of such terms or other similar expressions. The Company wishes to caution you that these statements are only predictions, and are based upon various assumptions which are inherently subject to significant uncertainties and contingencies which are difficult or impossible to predict and are beyond our control. We may not achieve or accomplish these plans or predictions. The Company does not necessarily intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in projections or forward-looking statements of the Company, including, among others, general economic conditions, the competitive environment, risks associated with operating in Russia, rapid technological and market change in the industries in which the Company operates, as well as many other risks specifically related to the Company and its business and operations.

Statement Regarding Inside Information

Some of the information in this document may constitute inside information. The subject matter, the identity of the issuer, the identity of the persons making the notification and their titles, and the date and time of the notification, are all as set forth above.

1 The book value of MegaFon’s assets as of June 30, 2016 amounts to 471.8 billion Russian rubles (calculated in accordance with Russian accounting standards). Accordingly, 10% of the book value of MegaFon’s assets as of June 30, 2016 constitutes approx. 47.2 billion Russian rubles.